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Macroeconomics is very far from perfect but we do know how to stop, or manage inflation. You can stop it by keeping the money supply stable (don’t print any mor
by barry-cotter 5y ago
Macroeconomics is very far from perfect but we do know how to stop, or manage inflation. You can stop it by keeping the money supply stable (don’t print any more money than necessary to account for notes and coins wearing out it being lost). You can have constant low inflation by targeting the growth rate of the money supply (like the EU’s near but not at 2% target).
That’s it. Plenty of countries don’t do that but it’s a matter of political will/popular support for ending inflation, not a technically difficult problem. At worst you can just adopt another country’s currency like Kosovo has the Euro or Costa Rica has the dollar.
- anikuni 5y agoSure, that's an usual explanation. Quantity Theory of Money, which goes back to Copernicus. One could point out to different ones as well, such as Nitzan and Bichler's "differential accumulation", in which, having technological/growth difficulties, the ones who benefit most from stagnation are the ones who can jack up prices the most (entities who control most of the supply, with most mark-up power). Read: inflation. There are many other views as well, I just pointed out one which I like.
- imtringued 5y agoMainstream economists don't know how to stop inflation. Keeping the money supply stable does not stop inflation. Inflation is ehat happens when you have a currency where a portion of it is not circulating in the economy and then suddenly becomes active and turns into demand for products and services. Even a gold standard will have inflation.